Difference Between STP Broker & ECN Broker
Types of Commodity Trading Brokers: ECN Brokers
Most commodity trader ask what is the difference between the STP & ECN?
STP Commodities Trading Broker
STP broker has many liquidity providers, but selects the best one at any one time automatically for the trader. Therefore when a trader places a commodity trade the commodity orders will be passed direct to this interbank network of liquidity providers - after the liquidity provider with the low spread is selected automatically by the STP execution model.
Therefore STP commodity broker is like ECN commodity broker the only difference is that the Straight Through Processing Brokers automatically chooses the best fill at that particular time of trade execution and does it automatically for the trader.
ECN Commodities Trading Broker
ECN commodity broker has many liquidity providers from which a trader will see all at the same time and choose which liquidity provider to trade with, It is like having 10 commodity brokers commodity quotes to select from which to trade - these ten quotes are for the same commodity instrument - each quote from a different liquidity provider.
ECN broker quotes model means a trader will have to look at many streaming commodity quotes at the same time & select one, this streaming quote will have varying spreads markups and a trader chooses the low spread.
There's no much difference between ECN commodity broker and STP commodity broker, that is why some commodity traders or some commodity brokers will use the term interchangeably, because only difference between Straight Through Processing execution from the Electronic Communication Net-work execution is that STP commodity broker only chooses to have display only one liquidity provider with the best markup at the time of trade while ECN implements a wide variety of liquidity providers and displays all their quotes to the traders and it's upto the trader to choose which liquidity provider to select from while trading.
According to commodity broker reviews, these ECN & STP brokers are also have the lowest commodity spreads, therefore if you are looking for the low spreads it is good to choose an STP broker or an ECN broker.
Most online commodity brokers do not want to clutter the traders workspace with multiple streaming quotes from various different liquidity providers for the same commodities at the same time because this might confuse commodities traders, especially the beginner traders who do not know what is what from what, that is why most commodity brokers might be ECN brokers but only choose to display only one streaming commodity trading price quotes from only one interbank liquidity provider, therefore becoming more of an STP broker rather than an ECN broker, but the model of commodity trade execution operation is basically one and the same.
If you were to open a commodity trading account with an ECN commodity broker you would get like 10 different quotes of Commodities Trading from different liquidity providers and to trade you would have to chose the commodity quote from one of these liquidity provider. 10 quotes for every trading instrument would make your commodities trading platform workspace too crowded (An ECN Commodity Trading Broker Lists Spread from many liquidity providers). Another thing is which you would need to have a more complex commodity software to stream these multiple commodity quotes, this type of commodity platform would not make the best platform software to trade with. Furthermore, if you open an ECN commodities trading account you will have to pay additional commissions on top of commodity spreads. This is also another reason why to choose STP commodity broker since unlike ECN commodity broker, STP commodity broker don't charge commissions on top of spreads. This means that the ECN commodity broker execution is not the cheapest execution method & will charge commodity traders extra commissions on tops of spreads adding onto your commodity trading transaction costs.
STP Commodity Trading Brokers offer the best liquidity for commodities traders to make trades
STP commodity brokers do not have a commodity dealing desk and therefore this provides for full commodity trade order transparency, faster and better order fills. The full order transparency means this type of STP commodity broker does not create an artificial market for clients, but instead shows a trader the real time commodity trading price data quotes from an electronic network of banks and allows the trader to enter the true market conditions created by the various commodity market participants.
Straight Through Processing Commodity Trading Brokers- is the name given to commodity brokers that: upon receiving of a commodity order they will pass on the commodity orders directly to the network of banks through liquidity providers and as such there is no intermediary who will be involved in the order execution in other words the Straight Through Processing Execution Model will not be filtering commodity trade orders through a Commodity Trading Dealing Desk. The absence of a Commodity Trading Dealing Desk is what makes the STP execution model the best choice for many online commodities traders.
With absence of such an intermediary process such as a commodity dealing desk the STP commodity broker is able to process its clients commodity orders without any delay. In addition STP commodity brokers do not send re-quotes to their clients something that most traders regard as an advantage.
This also enables the Straight Through Processing Commodity Trading Brokers to allow commodities traders to trade during the release times of financial news without any restrictions. Other online brokers might not have the liquidity of an STP commodity broker and might in turn lock out commodity trading for a few minutes before and after a commodity news release.
Straight Through Processing Commodities Trading Brokers provide the best commodity order execution and access to trade order execution due to high internal liquidity rate provided by multiple liquidity providers and reliable interbank partners they have.
Different Types of Commodities Trading Brokers - The Difference Between STP Commodity Trading Broker & ECN Commodity Trading Broker - Difference Between STP Commodity Trading Broker & ECN Commodities Broker - Types of Commodity Trading Brokers: STP Brokers - Types of Commodity Trading Brokers: ECN Brokers.
